Category Legal Affairs

Subcontractor required to provide own insurance held not entitled to project insurance (UK)

06 April 2018 Patrick Bracher, Norton Rose Fulbright
Patrick Bracher from Norton Rose Fulbright.

Patrick Bracher from Norton Rose Fulbright.

Where project-wide cover was taken out for a construction contract for extensions to a school but the roofing contractor was obliged to take out its own insurance, it was held that the roofing contractor who caused a fire and a loss of £8.75 million was not entitled to the benefit of the project-wide insurance.

The facts are sadly familiar. Hot work was done on a roof using a blowtorch to stick down roofing membrane. A fire occurred which spread and caused extensive damage to the building. It was an express term of the roofing subcontract that the subcontractor would obtain its own third-party liability insurance cover and it did so for £5 million.

The three project insurers paid out £8.75 million and sought a subrogated recovery of the £5 million from the roofing subcontractor, essentially from its insurers who resisted the claim.

It was argued by the roofing contractor that it was entitled to cover provided by the project insurance and that therefore the project insurers had no right of subrogation against it. The court found that although it is commercially sensible for all the risks in a contract to be covered by a single insurance policy as is commonly done in a Contractors All-Risk insurance policy, where there is a specific provision in the subcontract that the subcontractor must have its own third party liability insurance, this provision overrides the subcontractor’s entitlement to the benefit of the project insurance.

The project insurers recovered the £5 million.

[The case is Haberdashers’ Aske’s Federation Trust Limited V Lakehouse Contracts Limited & Others]

First published by Financial Institutions Legal Snapshot.

Quick Polls


What is your one-liner for the 2024 National Budget speech?


Creepy failure to adjust income tax, medical tax credits
Overall happy, it should support economic growth
Overall unhappy, soaring public sector wages and broken SOEs suck..
There are too few taxpayers, too many grant recipients.
fanews magazine
FAnews February 2024 Get the latest issue of FAnews

This month's headlines

On the insurance industry’s radar in 2024
Insurers, risk managers unsure of AI’s judgement credentials
Is offshore the place to be in 2024?
Gap claims: erosion of medical benefits, soaring specialist fees
Investments and retirement… is conventional wisdom under threat?
Subscribe now